A company depends on its directors, executives and managers to lead the company to success. But serving in those roles places business leaders at risk and exposes them to allegations of making improper management decisions or of breaching their fiduciary responsibilities. The financial impact of such allegations can be significant, both to the company and to the individual directors and officers.

Directors and Officers (D & O) insurance is “errors or omissions” insurance for executives and the Boards of Directors. Coverage may be written to cover the entity as well. Virtually every organization (and its directors and officer) are vulnerable to D & O claims including:

Private companies

Public companies

Non-profit organizations

Why organizations need D & O Insurance

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Leaders of private and public companies and non-profits can be held personally liable for the decisions they make. Without D & O insurance, their personal assets could be at risk.

D & O insurance is often required to attract and retain highly qualified directors and executives.

A change of control of a company increases the likelihood of a D & O claim.

D & O insurance, which can cover financial losses, helps fill gaps not covered by General Liability and Umbrella insurance.

Examples of conduct that can lead to D & O Claims:

Breach of conduct

Wasting assets

Extending credit where not reasonable

Mixing business and personal assets

Failure to prevent embezzlement

Self-dealing

Violation of statutes

Violation of company articles or bylaws

Failure to disclose conflicts of interest

Errors in judgement

Deceptive business practices

Preparation of false or misleading reports

Failure to disclose material facts

Failure to properly supervise employees

Common D & O Exclusions:

Fraudulent, criminal or intentional non-compliant acts, but innocent parties remain covered if they are co-defendants

Illegal remuneration or personal gain

Claims covered by other insurance policies

Running a business in today’s fast-paced and complex environment is challenging. Even highly-competent decisions makers are at risk of having their decisions questioned by a wide range of third parties. When that happens managers’, officers’ and directors’ personal assets may be at risk.

Hortica offers Directors and Officers Liability to cover these exposures. Once the realm of public companies, more and more private companies are making Directors and Officers Liability a part of their risk management program.